Michael Burry's Bearish Prediction on AI Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 24 2026
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
- Burry's Accusations Against Big Tech: Burry claims that major tech firms like Meta and Microsoft are manipulating accounting practices and extending depreciation schedules to inflate earnings, although he overlooks the long-term value of AI infrastructure and the potential for reusing GPUs.
- CAPEX and Cash Flow Strain: Burry warns that unprecedented capital expenditures will strain cash flow; however, Alphabet's cash from operations has soared from under $100 billion to $164 billion by 2026, demonstrating significant cash flow growth driven by AI.
- NVIDIA Valuation Controversy: Burry compares NVIDIA to Cisco during the 2000 internet bubble, arguing it is overvalued, yet NVIDIA's current P/E ratio of 47 is significantly lower than Cisco's over 200 at its peak, highlighting fundamental differences between the two.
- Surge in H100 Rental Prices: Since mid-December, rental prices for NVIDIA's H100 GPUs have increased by approximately 17%, indicating strong demand for AI infrastructure, which bodes well for related stocks like Nebius and CoreWeave.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 392.740
Low
500.00
Averages
631.36
High
678.00
Current: 392.740
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Impact on SoftBank's Investment Portfolio: S&P indicates that the liquidity of SoftBank Group's investment portfolio is expected to decline.
- OpenAI's Growing Influence: OpenAI now accounts for a larger share of SoftBank's investment portfolio, contributing to the anticipated worsening of liquidity.
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- Focus on Technical Safety: Altman emphasized that many technologies are not yet ready to handle complex safety trade-offs, and OpenAI will collaborate with the Pentagon to ensure the safe use of its technologies, demonstrating the company's commitment to responsible technology deployment.
- Market Reaction and Competitive Pressure: Following the deal with the Defense Department, public reactions to OpenAI were mixed, with many users reportedly switching to competitor Anthropic's Claude, reflecting a heightened market concern for transparency in AI technology usage, which could impact OpenAI's market share.
- Support for Competitors: Altman urged on social media for the Defense Department not to designate Anthropic as a supply chain risk, indicating his emphasis on industry collaboration and aiming to maintain stability and growth within the broader AI ecosystem.
See More
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- AI Investment Impact: While the overall market has been bearish on tech stocks, Microsoft's decline is more pronounced than other tech giants, as evidenced by the Roundhill Magnificent Seven ETF's modest 7% drop, suggesting that Microsoft's challenges are more complex.
- Valuation and Growth: At the start of 2023, Microsoft's price-to-earnings ratio was around 34, now reduced to 25; although AI has provided some growth, its December quarter growth rate was only 17%, dropping to 15% when excluding foreign exchange, indicating insufficient growth momentum.
- Long-term Investment Potential: Despite the current stock decline, Microsoft boasts a diversified business portfolio, including gaming, office software, and devices, and has amassed over $119 billion in profit over the past 12 months, indicating strong long-term investment value.
See More
